Friday, February 6, 2009
An essay -Reprising CAPITALISM & Entrepreneurship.
I graduated during the early part of what was a glorious surge towards a close of a century. Economy was bustling around the globe. Big Blue was powering its way from a deep rut and every one agreed that "elephants could dance". The bricks crumbled not only uniting Germany but also bringing global barriers which usually ended at ones shores or sea ports. Portals opened up and capital was jetting furiously exhibiting its prowess of being ever so liquid.
Amongst assets the most liquid of them all "Equities" were powering bourses around the BRIC countries and all of a sudden Hang Seng, Kospi, Sensex began outperforming their peers NASDAQ,FUTSE and DAX indices. Oil prices were soaring to astronomical highs threatning to cross the 100 $ a barrel mark.
Every one thought what heralded a boom time for the IT czars "Y2K" will dawn a similar euphoria across businesses in a new century. That’s when George W Bush in company with Tony Blair went in search of "weapons of mass destruction". Outside of the zeal to quell Islamic fundamentalist forces using a absurd ploy for which the world would pay in great deal later along with republicans and Tony Blair losing their seat of authority another "weapons of mass destruction" was beginning to run amok.
Call it greed , over leveraging or derivatives, mortgages, sub prime et al the elements were all put together growing in enormous propositions to pull down the good work done by centuries of blood sweat and toil put in by legendary entrepreneurs, brave heart investors and a creative spirit called capitalism. "Black Swans" and "being fooled by randomness" by Nissim Taleb made sense like a slap on every foreteller and economist predicting future based on the past.
Add to that we had sterling and shameful examples such as Enron, CA , Worldcom, Satyam and BT who cemented the conviction of the downturn albeit for reasons created by greed of another kind. Sterling in their raise and shameful in their fall.
Oil Prices came dowm to as low as 40 $ per barrel after touching 140 $. So did institutions like Lehman Bros, Fannie and Freddie, Meryll Lynch . They came down and crushed several 100 billions of investor wealth. A few lucky ones like Citi got bailed out to survive.
Barely had the world won over the communist block which dithered away braring the indomitable Fidel Castro and a few isolated folks in India, all and sundry believed that capitalism promised what its practioners believed in. Capitalism an economic system in which wealth, and the means of producing wealth, are privately owned and controlled rather than state-owned and state controlled.
Now that what as a graduate from Osmania University that I witnessed. In 15 short years the pcyhe from being bullish changed to a sombare summer today.An environment from being such a great promise to today when many pundits compare the times to the great depression.
Economists, Financials analysts and the other player in the capital market “Bears” are today piling up reams of rhetoric and their contribution to the forth estate being a gloomy treatise bereft of hope and sunshine are adding to the pessimism.
Remember Capitalism as we know is systems where the state need to limit and expressly play the role of a facilitator; largely take on the onus of responsibly creating an environment conducive for global trade/ free trade.A step further put in place regulations and create resilient infrastructure and ensure peace times are always the kind of times we get to live in.
But the state starting from Capitol Hill or shall I say a “Changed Capitol Hill” seems to have rather seriously began to realize and act as though they were in a righteous place to anoint the messiahs and orchestrate the conduct of business after having absolved the guilty with behemoth bail out packages.
Did I hear that they are going to start with a focus right at the top? The paycheque of the Chief Executive? And did we hear that we going to cap their draw for the element of risk that they undertake to manage ( or mismanage when this para gets superfluous ) ? In times those are as challenging as they come by? Will these state artists also start putting a cap on the profit margins that gets charged from their customers? Will the state start to curb businesses with stringent regulatoty road blocks hindering a rebound of capitalistic forces.
Now this is certainly going to be the beginning of the end of the idea capitalism as we know it? If we allow the state to take control of business and call the shots. If only we fail to assert our self now and pledge that a short span of lull and a few rotten eggs wont fail the great promise of capitalism.
Yes there has been a time lately when certain elements have undermined the good work done by an army of value creators. Yes Japan has been in the dumps over a decade now due to complexities yet to be deciphered? And oh yes the West is aging and the youthful east with zest is bustling with enthusiasm only to be rapped time and again by terror perpetrators and the infections from NASDAQ , FUTSE and bourses from the west. Every time there is a sneeze in the west the east catches cold.
But then capitalism is unquestionably powered by consumers .Who will disagree the growing influence of two of the most populous nations on planet earth? More than every before the consumer demands value at a fair price. Savings ecomonies are changing to spending economies. Capitalism thrives due to imaginary entrepreneurs who take on daunting risks and audacious challenges. Entrepreneurs excel in an environment fostering free trade devoid of STATE interventions. Capitalistic forces create jobs and jobs create consumption and then an upward spiral tornado which has the potential to wake up the slumbering bulls.
Raise my dear capitalists, bulls and that breed of untainted entrepreneurs whose eyes gets glazed by the sight of an opportunity even in time of depression. The brand of entrepreneurship from the Valley which was folk lore only a decade ago needs to be rekindled.
This time around there are no bricks and no shores inhibiting businesses. Portals are conducive to trade across borders with a click of a mouse.The world today is hot and flat.Halt the state today , their say in business. Pegging Pay cheques and cap in H1B's and vote them to power for what they do well. Preserving democracy and creating a stable environment.Ensuring freedom for all.Opportunity to all as equals.
The onus of conducting capitalism should be with the entrepreneurs and the choice with consumers. This is going to be an uphill trek, there is a peak to be scaled every day. A few of us will fall by the way side, but will create a certian path ahead in doing so. But some day in the near future every one risk taker and investor will hoist flags of capitalism high.
For that to happen we need new age beacons like IBM,HP, Microsoft,Google,Apple,Toyota,eBay,Amazon, to emerge from the lows of today. These beacons and champions will emerge from all round the world. BRIC world, EU, APAC and US as well. They may be microfinance companies helping the poorest raise up to a level playing field, social networking players desseminating positive influence faster than what Mahatma Gandhi, Martin Luther King , Nelson Mandela or a Che Guevara could achieve. The world will in fact be flatter because of the waning of the superpowers or G8 countries, but also because of the raise of the Individual and the voice of the individual combined with the power of the community.
Capitalist will find ways to create markets and rainmakers will find business which hitherto remained unaddressed. Web 2.0 will increment the profound impact on business and societies and IT will become mainstream in every walk of life. Capitalism will spawn new businesses on charters addressing global warming or saving a green planet from over heating. Markets will get seamless and yet remain decoupled and financial services will undergo a transformatioal change.
A Global economic architecture will emerge challenging status quo of certian archiac norms and way of life. Business leaders will grow younger and corporate boards get more diverse , independent and accountlable. Lines between business will overlap and newer competition , coopition , cooperation models will be evolved. Global Delivery will become a common strategic fabric for most companies and talent capital will become the most significant capital.
For the above to happen the state need to responsibly understand the limitations of the statesmen and recognise that the business of business is best handled by capitalists and entrepreneurs. Boderless business and common currencies are what state actors should strive to provide as environment.
Curbing terror in many ways be achieved by equitable distribution of wealth and pursuing plural agendas to execute inclusive mandates ebracing all forms of society elements.
The terror perpetrators feed on some undesirable situations like poverty. In an event capitalists and state leaders disolve the borders and embrace a global and inclusive charter than the cess pool of terror camps will dry up naturally.
Greed is an obnoxious social evil. If corporate citizenry is built on a value systems of organic or inorganic but ethical values then issues emanating from greed will natutally be not proliferated.
There is a lot of promise and a lot to be gained from our uphill journey from the present down turn. I am an optimist and hence i wont ascribe the situation as downturn, rather call it a phase in correction. The Statesmen and Capitalist are both distinct and have specific roles to play. Both need to work togather rather than cross swords at cross purpose. For evey Raju & Madoff from corporate there was a Bush and a Blair from polity.
If everyone understands and applies the macro consensus to work on a future agenda and execute then the road to recovery is just round the corner. Lets not spend too much time understanding the turmoil, Japan hast yet figured out. Lets be the part of the solution and chase a future good for all of us.Gobal Citizens. Lets all turn atheists if it helps our children live in a clean and green and peaceful planet. The graduates to be churned out of varsities need a lasting legacy that we can afford to leave behind us. Lets take on the responsibility sincerely.